01/14/2015

Budget Outlook: Library will account for half of anticipated 6.3 percent increase in municipal spending next year

Taxes will increase at least 2.4 percent next year as the town begins to pay for the library renovation approved by voters in November.

The library will account for more than half of the anticipated 6.3 percent, increase in municipal spending officials are forecasting for 2015-16, Town Manager Michael McGovern reported at the Town Council's meeting Jan. 12, 2015. The report was a "high level" view of what the town can expect as work begins on spending for the fiscal year to begin July 1.

Overall, McGovern predicted property taxes will increase at least 2.4 percent, or 40 cents per $1,000 of assessed valuation next year, assuming an increase in municipal revenues of $100,000. The increase would cover municipal services and not include school services.

The 2014-15 municipal budget of $9.2 million is expected to increase $585,000, a jump of 6.3 percent, topped by spending for the library ($300,000); an average 2.5-percent increase for employee pay and benefits ($125,000); additional human-resource costs ($30,000); legal fees ($15,000); and, $100,000 budgeted for capital needs according to the town's approved capital stewardship plan. McGovern's preliminary analysis also anticipates a general, 1-percent increase in non-payroll spending ($45,000), and a $30,000 reduction in energy costs due to falling oil prices.

For the owner of a home valued at $300,000, approximately $60 of the anticipated tax increase would go toward the library, and $60 would go toward other municipal services, McGovern said.

The $30,000 for human resources represents the town's contribution toward a town and School Department assistant to help with benefit administration, employee handbooks and "a whole host of things" that have been discussed over the last year relating to human resources, McGovern said.

Unknown, however, is the effect Gov. Paul LePage's budget recommendations will have on Cape Elizabeth in 2015-16.

The state budget recommendation is looking to keep state revenue sharing, a $450,000 revenue for Cape Elizabeth, flat for 2015-16 but eliminate it the following year, McGovern said.

A more immediate impact for Cape Elizabeth taxpayers is a proposal to eliminate the $10,000 homestead exemption for Maine homeowners younger than 65. Those older than 65 making with their Maine home their primary residence would see their exemption double, McGovern said. The exemption saved qualifying Cape homeowners approximately $168 on their tax bills last year.

Another proposed state-level change, which McGovern said could impact Cape Elizabeth more than even revenue sharing, is a proposal to reduce the state's contribution to teacher retirement costs from 100 percent a year ago to approximately 20 percent. The state covered nearly $2 million of the cost last year.

Although the impact of state budget proposals on Cape Elizabeth are unclear, McGovern said they bear watching. "We're in for an interesting session in Augusta," McGovern said.

Last year there was no tax-rate increase for municipal services. School spending accounted for 49 cents of the overall 52-cent tax rate increase from fiscal 2014 to 2015.

Councilors last year requested McGovern present a budget outlook prior to formulating the actual budget.